Correlation Between American Axle and Ford
Can any of the company-specific risk be diversified away by investing in both American Axle and Ford at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Axle and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Axle Manufacturing and Ford Motor, you can compare the effects of market volatilities on American Axle and Ford and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Axle with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Axle and Ford.
Diversification Opportunities for American Axle and Ford
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Ford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Axle Manufacturing and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and American Axle is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Axle Manufacturing are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of American Axle i.e., American Axle and Ford go up and down completely randomly.
Pair Corralation between American Axle and Ford
Considering the 90-day investment horizon American Axle Manufacturing is expected to generate 1.48 times more return on investment than Ford. However, American Axle is 1.48 times more volatile than Ford Motor. It trades about 0.23 of its potential returns per unit of risk. Ford Motor is currently generating about 0.22 per unit of risk. If you would invest 580.00 in American Axle Manufacturing on September 3, 2024 and sell it today you would earn a total of 81.00 from holding American Axle Manufacturing or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Axle Manufacturing vs. Ford Motor
Performance |
| Timeline |
| American Axle Manufa |
| Ford Motor |
American Axle and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Axle and Ford
The main advantage of trading using opposite American Axle and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Axle position performs unexpectedly, Ford can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ford will offset losses from the drop in Ford's long position.| American Axle vs. Allison Transmission Holdings | American Axle vs. Aptiv PLC | American Axle vs. LKQ Corporation | American Axle vs. Lear Corporation |
| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |